: CV !APR APR ~"E ". J. -{Proposed] JONATHAN E. NUECHTERLEIN GENERAL COUNSEL

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1 .. 1 JONATHAN E. NUECHTERLEIN GENERAL COUNSEL MATTHEW H. WERNZ mwernz@ftc.gov Federal Trade Commission West Monroe Street, Suite 1 Chicago, Illinois 00 Tel: () 0-; Fax: () 0-00 RAYMOND E. MCKOWN (Cal. BarNo. 0) rmckown@ftc.gov Federal Trade Commission Wilshire Boulevard, Suite 00 Los Angeles, California 00 Tel: () -; Fax: () -0 Attorneys for Plaintiff FEDERAL TRADE COMMISSION UNITED STATES DISTRICT COURT CENTRAL DISTRJCT OF CALIFORNIA ; FEDERAL TRADE COMMISSION, 1 1 Plaintiff, ALED CLERK U.S. DISTRlCT COURT APR 0 CENTRAL DISTRICT OF CALIFORNIA BY DEPUTY : CV 0 Case No. - 1 v. -{Proposed] PURISTS CHOICE LLC, a California limited liability company, ARTIJR BABAY AN, individually and as an owner and manager of SALE SLASH, LLC and PURISTS CHOICE LLC, and ~ ~ Page 1 of Ex Parte Temporary Restraining Order with an Asset Freeze, Appointment of a Receiver, and Other Equitable Relief, and Order to Show Cause Why a Preliminary Injunction Should Not Issue LODGED ClERK, U.S. DISTRICT.!APR ~"E ". J --..' :,,ftral DISTRICT OF CA LI <- O~ N IA '. _ Df'PtiTY

2 1 V AHE HAROUTOUNIAN, individually and doing business as PRISMA PROFITS, Defendants. Plaintiff Federal Trade Commission ("FTC") has filed a complaint seeking a permanent injunction and other equitable relief, pursuant to Sections (b) and 1 of the Federal Trade Commission Act ("FTC Act"), U.S.C. (b) and (b), and Section (a) of the Controlling the Assault ofnon-solicited Pornography and Marketing Act of0 (the "CAN-SPAM Act"), U.S.C. 0(a). The FTC also has moved pursuant to Rule (b) of the Federal Rules of Civil Procedure, Fed. R. Civ. P., for an Ex Parte Temporary Restraining Order with an Asset Freeze, Appointment of a Receiver, and Other Equitable Relief, and Order to Show Cause Why a Preliminary Injunction Should Not Issue ("TRO" or "Order"). 1 1 FINDINGS OF FACT 1 This Court, having considered the complaint, the TRO application, and all attached declarations, exhibits, and memorandum of law filed in support, finds that: 1. This Court has jurisdiction over the subject matter of this case, there is good cause to believe it will have jurisdiction over all the parties hereto, and venue in this district is proper; Page of

3 There is good cause to believe that Defendants Sale Slash, LLC, a California limited liability company, Purists Choice LLC, a California limited liability company, Artur Babayan, and Vahe Haroutounian have engaged and are likely to continue to engage in acts or practices that violate Sections (a) and of the FTC Act, U.S.C. (a) &, and Section (a) of the CAN-SPAM Act, U.S.C. 0(a), and that the FTC is therefore likely to prevail on the merits of this action;. There is good cause to believe that consumers will suffer immediate and continuing harm from Defendants' ongoing violations of Section (a) and ofthe FTC Act and Section (a) of the CAN-SPAM Act unless Defendants are restrained and enjoined by Order of this Court;. There is good cause to believe that immediate and irreparable damage to the Court's ability to grant effective final relief for consumers in the form of monetary restitution and/or disgorgement of ill-gotten gains will occur from the transfer, dissipation, or concealment by Defendants of their assets or business records unless Defendants are immediately restrained and enjoined by order of this Court; and that in accordance with Fed. R. Civ. P. (b) and Local Rule -1., the interest of justice requires that the FTC's application be heard ex parte without prior notice to Defendants. Therefore, there is good cause for relieving the FTC of the duty to provide Defendants with prior notice of the FTC's application; Page of

4 Good cause exists for appointing a receiver over the Corporate Defendants, permitting the FTC immediate access to Defendants' business premises, and permitting the FTC to take expedited discovery;. Weighing the equities and considering the FTC's likelihood of ultimate success, a temporary restraining order with an asset freeze, appointment of a receiver, immediate access to business premises, expedited discovery as to the existence and location of assets and documents, and other equitable relief is in the public interest;. No security is required of any agency of the United States for issuance of a TRO, Fed. R. Civ. P. (c); and. The interest of justice requires that the FTC's TRO Application be heard without notice to Defendants, and as a result, pursuant to Local Rule -1., the Court waives the notice requirement of Local Rule DEFINITIONS For the purposes of this TRO, the following definitions shall apply: 1. "Asset" or "Assets" means any legal or equitable interest in, right to, or claim to, any real or personal property, including, but not limited to, "goods," "instruments," "equipment," "fixtures," "general intangibles," "inventory," "checks," or "notes" (as these terms are defined in the Uniform Commercial Code), lines of credit, chattels, leaseholds, contracts, mail or other deliveries, Page of

5 shares of stock, lists of consumer names, accounts, credits, premises, receivables, funds, and all cash, wherever located.. "Assisting others" includes, but is not limited to: (a) performing customer service functions, including, but not limited to, receiving or responding to consumer complaints; (b) formulating or providing, or arranging for the formulation or provision of, any sales script or other marketing material; (c) providing names of, or assisting in the generation of, potential customers; (d) performing or providing marketing or billing services of any kind; (e) acting as an officer or director of a business entity; (f) hosting websites; or (g) processing payments.. "Clear and conspicuous" and "clearly and conspicuously" means that a required disclosure is difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers, including in all of the following ways: a. In any communication that is solely visual or solely audible, the disclosure must be made through the same means through which the communication is presented. In any communication made through both visual and audible means, such as a television advertisement, the disclosure must be presented simultaneously in both the visual and audible portions of the communication, even if the representation requiring the disclosure is made in only one means. Page of

6 b. A visual disclosure, by its size, contrast, location, the length of time it appears, and other characteristics, must stand out from any accompanying text or other visual elements so that it is easily noticed, read, and understood. c. An audible disclosure, including by telephone or streaming video, must be delivered in a volume, speed, and cadence sufficient for ordinary consumers to easily hear and understand it. d. In any communication using an interactive electronic medium, such as the Internet or software, the disclosure must be unavoidable. e. The disclosure must use diction and syntax understandable to ordinary consumers and must appear in each language in which the representation that requires the disclosure appears. f. The disclosure must comply with these requirements in each medium through which it is received, including all electronic devices and face-toface communications. g. The disclosure must not be contradicted or mitigated by, or inconsistent with, anything else in the communication.. "Commercial electronic mail message" (or "commercial ") means any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service Page of

7 (including the content on an Internet website operated for commercial purposes). u.s.c. 0().. "Competent and reliable scientific evidence" means tests, analyses, research, or studies that have been conducted and evaluated in an objective manner by qualified persons and are generally accepted in the profession to yield accurate and reliable results.. "Corporate Defendants" or "Receivership Defendants" means Sale Slash, LLC, a California limited liability company, and Purists Choice LLC, a California limited liability company, and their successors and assigns, as well as any subsidiaries, and any fictitious business entities or business names created or used by these entities.. "Covered Product" means any dietary supplement, food, or drug, including, but not limited to, Premium Green Coffee, Premium Raspberry Ketone, Pure Caralluma Fimbriata Extract, Pure Forskolin Extract, Pure Garcinia Cambogia, Pure Garcinia Cambogia HCA, Pure Saffron, and Pure White Kidney Bean Extract.. "Defendants" means all of the Individual Defendants and the Corporate Defendants, individually, collectively, or in any combination.. "Document" or "Documents" means any materials listed in Federal Rule of Civil Procedure (a), and includes writings, drawings, graphs, charts, Page of

8 photographs, audio and video recordings, computer records, and other data compilations from which information can be obtained and translated, if necessary, through detection devices into reasonably usable form. A draft or non-identical copy is a separate document within the meaning of the term.. "Financial Institution" means any bank, savings and loan institution, credit union, or any financial depository of any kind, including, but not limited to, any brokerage house, trustee, broker-dealer, escrow agent, title company, commodity trading company, or precious metal dealer.. "Header Information" means the source, destination, and routing information attached to an electronic mail message, including the originating domain name and originating electronic mail address, and any other information that appears in the line identifying, or purporting to identify, a person initiating the message. U.S.C. 0().. "Individual Defendants" means Artur Babayan and Vahe Haroutounian, or by whatever other name each may be known.. "Initiate," when used with respect to a commercial electronic mail message, means to originate or transmit such message or to procure the origination or transmission of such message. U.S.C. 0().. "Person" means a natural person, an organization or other legal entity, including a corporation, partnership, sole proprietorship, limited liability Page of

9 company, association, cooperative, or any other group or combination acting as an entity.. "Plaintiff," "Commission," or "FTC" means the Federal Trade Commission. 1. "Procure," when used with respect to the initiation of a commercial electronic mail message, means intentionally to pay or provide other consideration to, or induce, another person to initiate such a message on one's behalf. U.S.C. 0(). 1. "Sender" means a person who initiates a commercial electronic mail message and whose product, service, or Internet website is advertised or promoted by the message. U.S.C. 0(1). PROHIBITED WEIGHT -LOSS CLAIMS IT IS ORDERED that Defendants and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any Covered Product, are hereby temporarily restrained and enjoined from making, or assisting others in making, directly or by implication, including through the use of a product name, I. Page of

10 endorsement, depiction, or illustration, any representation, that: A. Such Covered Product causes, or assists in causing, weight loss, or any specific amount of weight loss; B. Such Covered Product causes, or assists in causing, rapid weight loss; or C. Consumers who use the Covered Product can generally expect to achieve the weight loss results represented by an endorser of such Covered Product; unless the representation is non-misleading and, at the time of making such representation, Defendants possess and rely upon competent and reliable scientific evidence, as that term is defined above, that is sufficient in quality and quantity based on standards generally accepted in the scientific fields, when considered in light of the entire body of relevant and reliable scientific evidence, to substantiate the representation is true. II. PROIDBITED MISREPRESENTATIONS IT IS FURTHER ORDERED that Defendants and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with any of them who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any corporation, Page of

11 subsidiary, division, or other device, in connection with the advertising, marketing, promotion, offering for sale, or sale of any Covered Product, are hereby temporarily restrained and enjoined from misrepresenting, or assisting others in misrepresenting, directly or indirectly, expressly or by implication, any material fact, including, but not limited to, that Defendants' products are or have been used, endorsed, or approved by specifically identified celebrities such as Oprah Winfrey and The Doctors television show. III. PROIDBITIONS AGAINST COMMERCIAL MISREPRESENATIONS IT IS FURTHER ORDERED that Defendants and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with any of them who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, marketing, promotion, offering for sale, or sale of any product, service, or program, are hereby temporarily restrained and enjoined from initiating the transmission of a commercial that: A. Contains, or is accompanied by, materially false or materially misleading header information, including but not limited to: Page of

12 an originating electronic mail address, domain name, or Internet Protocol address when the access to such originating electronic address, domain name or Internet Protocol address was obtained by means of false or fraudulent pretenses or representations; or. a "from" line (the line identifying or purporting to identify the person initiating the messages) that does not accurately identify any person who initiated the message; or B. Contains a subject heading likely to mislead recipients, acting reasonably under the circumstances, about material facts regarding the contents or subject matter of the message. IV. PROIDBITIONS AGAINST OPT-OUT AND POSTAL ADDRESS VIOLATIONS IT IS FURTHER ORDERED that Defendants and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with any of them who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, marketing, promotion, offering for sale, or sale of any product, service, or program, are hereby temporarily restrained and enjoined from initiating the transmission of a commercial that: Page of

13 A. Does not include a clear and conspicuous notice of the recipient's opportunity to decline to receive further commercial electronic mail messages from the sender at the recipient's electronic mail address and describes the means by which the recipient can decline to receive future commercial messages from the sender; B. Does not include a functioning return electronic mail address or other Internet-based mechanism, clearly and conspicuously displayed, that a recipient can use to submit a reply electronic mail message or other form of Internet-based communication requesting not to receive future commercial electronic mail messages from the sender at the electronic mail address where the message was received, and that remains capable of receiving such messages or communications for no less than 0 days after the transmission of the original message; c. Does not include the sender's valid physical postal address; or D. Is sent to a recipient's address, more than days after the sender receives a request from that recipient not to receive future commercial electronic mail messages from the sender at the recipient's electronic mail address. Page of

14 v. ASSET FREEZE IT IS FURTHER ORDERED that Defendants and their officers, agents, servants, employees, attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any trust, corporation, subsidiary, division, or other device, except as provided herein, as stipulated by the parties, or as directed by further order of the Court, are hereby temporarily restrained and enjoined from: A. Transferring, liquidating, converting, encumbering, pledging, loaning, selling, concealing, dissipating, disbursing, assigning, spending, withdrawing, granting a lien or security interest or other interest in, or otherwise disposing of any funds, real or personal property, accounts, contracts, shares of stock, lists of consumer names, or other assets, or any interest therein, wherever located, including outside the territorial United States, that are: 1. Owned, controlled, or held by, in whole or in part, for the benefit of, or subject to access by, or belonging to, any Defendant;. In the actual or constructive possession of any Defendant; or L'l the actual or constructive possession of, or owned, controlled, or held by, or subject to access by, or belonging to, any other Page of

15 corporation, partnership, trust, or any other entity directly or indirectly owned, managed, or controlled by, or under common control with, any Defendant, including, but not limited to, any assets held by or for any Defendant in any account at any bank or savings and loan institution, or with any credit card processing agent, automated clearing house processor, network transaction processor, bank debit processing agent, customer service agent, commercial mail receiving agency, or mail holding or forwarding company, or any credit union, retirement fund custodian, money market or mutual fund, storage company, trustee, or with any broker-dealer, escrow agent, title company, commodity trading company, precious metal dealer, or other financial institution or depository of any kind, either within or outside the territorial United States; B. Opening or causing to be opened any safe deposit boxes, commercial mail boxes, or storage facilities titled in the name of any Defendant, or subject to access by any Defendant or under any Defendant's control, without providing the Commission prior notice and an opportunity to inspect the contents in order to determine that they contain no assets covered by this Section; C. Cashing any checks or depositing or processing any payments from customers or clients of Defendants; D. Incurring charges or cash advances on any credit card issued in the name, singly or jointly, of any Defendant; or Page of

16 E. Incurring liens or encumbrances on real property, personal property, or other assets in the name, singly or jointly, of any Defendant or of any corporation, partnership, or other entity directly or indirectly owned, managed, or controlled by any Defendant. Notwithstanding the asset freeze provisions of Section V.A-E above, and subject to prior written agreement with the Commission, Individual Defendants may, upon compliance with Section IX (Financial Statements) infra, pay from their individual personal funds reasonable, usual, ordinary, and necessary living expenses. The funds, property, and assets affected by this Section shall include both existing assets and assets acquired after the effective date of this Order. VI. DUTIES OF THIRD PARTIES HOLDING DEFENDANTS' ASSETS IT IS FURTHER ORDERED that any financial institution, business entity, or person maintaining or having custody or control of any account or other asset of any Defendant, or any corporation, partnership, or other entity directly or indirectly owned, managed, or controlled by, or under common control with any Defendant, which is served with a copy of this Order, or otherwise has actual or constructive knowledge of this Order, shall: Page 1 of

17 A. Hold and retain within its control and prohibit the withdrawal, removal, assignment, transfer, pledge, hypothecation, encumbrance, disbursement, dissipation, conversion, sale, liquidation, or other disposal of any of the assets, funds, documents, or other property held by, or under its control: 1. On behalf of, or for the benefit of, any Defendant or any other Person subject to Section V above;. In any account maintained in the name of, or for the benefit of, or subject to withdrawal by, any Defendant or other Person subject to Section V above; and. That are subject to access or use by, or under the signatory power of, any Defendant or other Person subject to Section V above; B. Deny Defendants access to any safe deposit boxes or storage facilities that are either: 1. Titled in the name, individually or jointly, of any Defendant, or other Person subject to Section V above; or. Subject to access by any Defendant or other Person subject to Section V above; C. Within five ( ) days of the date of service of this Order, provide Plaintiff a sworn statement setting forth: Page 1 of

18 1. The identification number of each account or asset titled in the name, individually or jointly, of any Defendant, or held on behalf of, or for the benefit of, any Defendant or other Person subject to Section V above, including all trust accounts managed on behalf of any Defendant or subject to any Defendant's control;. The balance of each such account, or a description of the nature and value of such asset; The identification and location of any safe deposit box, commercial mail box, or storage facility that is either titled in the name, individually or jointly, of any Defendant, or is otherwise subject to access or control by any Defendant or other Person subject to Section V above, whether in whole or in part; and. If the account, safe deposit box, storage facility, or other asset has been closed or removed, the date closed or removed and the balance on said date; D. Within five () days of a request from any Plaintiff, provide Plaintiff copies of all records or other documentation pertaining to each such account or asset, including, but not limited to, originals or copies of account applications, account statements, corporate resolutions, signature cards, checks, drafts, deposit Page 1 of

19 tickets, transfers to and from the accounts, all other debit and credit instruments or slips, currency transaction reports, I 0 forms, and safe deposit box logs; and E. This Section VI shall apply to existing accounts and assets, assets deposited or accounts opened after the effective date of this Order, and any accounts or assets maintained, held or controlled three years prior to the effective date of this Order. This Section VI shall not prohibit transfers in accordance with any other provision of this Order, any further order of the Court, or by written agreement of the parties. VII. MAINTAIN RECORDS AND REPORT NEW BUSINESS ACTIVITY IT IS FURTHER ORDERED that Defendants and their officers, agents, servants, employees, attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any trust, corporation, subsidiary, division, or other device, are hereby temporarily restrained and enjoined from: A. Failing to create and maintain books, records, accounts, bank statements, current accountants' reports, general ledgers, general journals, cash receipt ledgers, cash disbursement ledgers and source documents, documents indicating title to real or personal property, and any other data which, in reasonable Page 1 of

20 detail, accurately, fairly and completely reflect the incomes, disbursements, transactions, dispositions, and uses of the Defendants' assets; B. Destroying, erasing, mutilating, concealing, altering, transferring, or otherwise disposing of, in any manner, directly or indirectly, any documents, including electronically-stored materials, that relate in any way to the business practices or business or personal finances of Defendants; to the business practices or finances of entities directly or indirectly under the control of Defendants; or to the business practices or finances of entities directly or indirectly under common control with any other Defendant; and c. Creating, operating, or exercising any control over any new business entity, whether newly formed or previously inactive, including any partnership, limited partnership, joint venture, sole proprietorship, or corporation, without first providing Plaintiff with a written statement disclosing: (1) the name of the business entity; () the address, telephone number, address, and website address of the business entity; () the names of the business entity's officers, directors, principals, managers, and employees; and ( ) a detailed description of the business entity's intended activities. Page of

21 VIII. PROIDBITION ON DISCLOSING CUSTOMER INFORMATION IT IS FURTHER ORDERED that Defendants and their officers, agents, servants, employees, attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any trust, corporation, subsidiary, division, or other device, are hereby temporarily restrained and enjoined from: A. Selling, renting, leasing, transferring, or otherwise disclosing the name, address, birth date, telephone number, address, Social Security number, Social Insurance number, credit card number, bank account number, or other financial or identifying personal information of any person from whom or about whom any Defendant obtained such information in connection with activities alleged in Plaintiffs Complaint; and B. Benefiting from or using the name, address, birth date, telephone number, address, Social Security number, Social Insurance number, credit card number, bank account number, or other financial or identifying personal information of any person from whom or about whom any Defendant obtained such information in connection with activities alleged in Plaintiff's Complaint. Page of

22 Provided, however, that Defendants may disclose such financial or identifying personal information to a law enforcement agency or as required by any law, regulation, or court order. IX FINANCIAL STATEMENTS IT IS FURTHER ORDERED that each Defendant shall serve upon counsel for Plaintiff, no later than five () business days after service of this Order, a completed financial statement accurate as of the date of entry of this Order, on the forms served on Defendants with this Order for Individual Defendants and for Corporate Defendants, as the case may be, signed under penalty of perjury. The financial statements shall include assets held outside the territory of the United States, shall be accurate as of the date of the entry of this Order, and shall be verified under oath. Defendants shall attach to these completed financial statements copies of all local, state, provincial, and federal income and property tax returns, with attachments and schedules, as called for by the instructions to the financial statements. Page of

23 X. TEMPORARY RECEIVER A. APPOINTMENT OF TEMPORARY RECEIVER IT IS FURTHER ORDERED that ~~p BJ0MS ~1 " ~~DC\~ Lh( appointed Temporary Equity Receiver ("Receiver") for Receivership Defendants and any of their affiliates, subsidiaries, divisions, or sales or customer service operations, wherever located, with the full power of an equity receiver. The Receiver shall be the agent of this Court, and solely the agent of this Court, in acting as Receiver under this Order. The Receiver shall be accountable directly to this Court. The Receiver shall comply with all Local Rules of this Court governing receivers. 1 B. RECEIVERSHIP DUTIES 1 1 IT IS FURTHER ORDERED that the Receiver is directed and authorized 1 to accomplish the following: 1. Assume full control of the Receivership Defendants by removing, as the Receiver deems necessary or advisable, any director, officer, employee, independent contractor, or agent of the Receivership Defendants, including any Individual Defendant, from control of, management of, or participation in, the affairs of the Receivership Defendants; Page of

24 . Take exclusive custody, control, and possession of all assets and documents of, or in the possession, custody, or under the control of, the Receivership Defendants, wherever situated. The Receiver shall have full power to divert mail and to sue for, collect, receive, take in possession, hold, and manage all assets and documents of the Receivership Defendants and other persons or entities whose interests are now held by or under the direction, possession, custody, or control of the Receivership Defendants. Provided, however, that the Receiver shall not attempt to collect any amount from a consumer or to allow the Receivership Defendants to continue to debit or otherwise charge a consumer's account, if the Receiver believes the consumer was a victim of the unfair or deceptive acts or practices alleged in the Complaint in this matter;. Use any means necessary to take possession of and to secure all areas of the business premises of the Receivership Defendants. Such steps may include, but are not limited to, the following as the Receiver deems necessary or advisable: (a) serving this Order; (b) completing a written inventory of all receivership assets; (c) obtaining pertinent information from all employees and other agents of the Receivership Defendants, including, but not limited to, the name, home address, Social Security number, job description, method of compensation, and all accrued and unpaid commissions and compensation of each such employee or agent; (d) videotaping all portions of the locations; (e) securing Page of

25 the locations by changing the locks and disconnecting any computer modems or other means of access to the computer or other records maintained at the locations; (f) requiring any persons present on the premises at the time this Order is served to leave the premises, to provide the Receiver with proof of identification, or to demonstrate to the satisfaction of the Receiver that such persons are not removing from the premises documents or assets of the Receivership Defendants; and/or (g) employ the assistance of law enforcement officers as the Receiver deems necessary to implement the provisions of this Order;. Conserve, hold, and manage all receivership assets, and perform all acts necessary or advisable to preserve the value of those assets, in order to prevent any irreparable loss, damage, or injury to consumers or to creditors of the Receivership Defendants, including, but not limited to, obtaining an accounting of the assets and preventing transfer, withdrawal, or misapplication of assets, and including the authority to liquidate or close out any open securities or commodity futures positions of the Receivership Defendants;. Enter into contracts and purchase insurance as advisable or necessary;. Prevent the inequitable distribution of assets and determine, adjust, and protect the interests of consumers and creditors vvho have transacted business with the Receivership Defendants; Page of

26 . Manage and administer the business of the Receivership Defendants until further order of this Court by performing all incidental acts that the Receiver deems to be advisable or necessary, which includes retaining, hiring, or dismissing any employees, independent contractors, or agents;. Choose, engage, and employ attorneys, accountants, appraisers, and other independent contractors and technical specialists, as the Receiver deems advisable or necessary in the performance of duties and responsibilities under the authority granted by this Order;. Make payments and disbursements from the receivership estate that are necessary or advisable for carrying out the directions of, or exercising the authority granted by, this Order. The Receiver shall apply to the Court for prior approval of any payment of any debt or obligation incurred by the Receivership Defendants prior to the date of entry of this Order, except payments that the Receiver deems necessary or advisable to secure assets of the Receivership Defendants, such as rental payments;. Determine and implement the manner in which the Receivership Defendants will comply with, and prevent violations of, this Order and all other applicable laws;. become party to such actions or proceedings in state, federal or foreign courts that Page of

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28 Open one or more bank accounts as designated depositories for funds of the Receivership Defendants. The Receiver shall deposit all funds of the Receivership Defendants in such a designated account and shall make all payments and disbursements from the receivership estate from such an account; 1. Maintain accurate records of all receipts and expenditures that he or she makes as Receiver; 1. Cooperate with reasonable requests for information or assistance from any state or federal law enforcement agency; and 1. File reports with the Court on a timely and reasonable basis. c. COOPERATION WITH THE RECEIVER IT IS FURTHER ORDERED that: 1. Defendants and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any trust, corporation, subsidiary, division, or other device, shall fully cooperate with and assist the Receiver. This cooperation and assistance shall include, but not be limited to: a. Providing any information to the Receiver that the Receiver deems necessary to exercising the authority and discharging the responsibilities of the Receiver under this Order; Page of

29 b. Providing any password required to access any computer, electronic file, or telephonic data in any medium; or c. Advising all persons who owe money to the Receivership Defendants that all debts should be paid directly to the Receiver.. Defendants and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any trust, corporation, subsidiary, division, or other device, are hereby restrained and enjoined from directly or indirectly: a. Transacting any of the business of the Receivership Defendants; b. Destroying, secreting, defacing, transferring, or otherwise altering or disposing of any documents of the Receivership Defendants, including, but not limited to, books, records, accounts, writings, drawings, graphs, charts, photographs, audio and video recordings, computer records, and other data compilations, electronically-stored records, or any other records of any kind or nature; c. Transferring, receiving, altering, selling, encumbering, pledging, assigning, liquidating, or otherwise disposing of any assets owned, Page of

30 controlled, or in the possession or custody of, or in which an interest is held or claimed by, the Receivership Defendants, or the Receiver; d. e. Excusing debts owed to the Receivership Defendants; Failing to notify the Receiver of any asset, including 1 accounts, of the Receivership Defendants held in any name other than the name of the Receivership Defendants, or by any person or entity other than the Receivership Defendants, or failing to provide any assistance or information requested by the Receiver in connection with obtaining possession, custody, or control of such assets; f. Doing any act or refraining from any act whatsoever to interfere with the Receiver's taking custody, control, possession, or managing of the assets or documents subject to this receivership; or to harass or interfere with 1 1 the Receiver in any way; or to interfere in any manner with the exclusive 1 jurisdiction of this Court over the assets or documents of the Receivership Defendants; or to refuse to cooperate with the Receiver or the Receiver's duly authorized agents in the exercise of their duties or authority under any Order of this Court; or g. Filing, or causing to be filed, any petition on behalf of the Receivership Defendants for relief under the United States Bank..ruptcy Code, U.S.C. 1 et seq., without prior permission from this Court. Page 0 of

31 D. DELIVERY OF RECEIVERSHIP PROPERTY IT IS FURTHER ORDERED that: 1. Immediately upon service of this Order upon them, or within such period as may be permitted by the Receiver, Defendants or any other person or entity shall transfer or deliver possession, custody, and control of the following to the Receiver: a. All assets of the Receivership Defendants, including assets subject to repatriation pursuant to Section XII, infra; b. All documents of the Receivership Defendants, including, but not limited to, books and records of accounts, all financial and accounting records, balance sheets, income statements, bank records (including monthly statements, canceled checks, records of wire transfers, and check registers), client lists, title documents and other papers; c. All assets belonging to members of the public now held by the Receivership Defendants; and d. All keys, codes, and passwords necessary to gain or to secure access to any assets or documents of the Receivership Defendants, including, but not limited to, access to their business premises, means of communication, accounts, computer systems, mail boxes, or other property. This Page 1 of

32 includes providing the necessary means to gain access to at least the following commercial mail boxes:. (i) (ii) (iii) South Lake A venue, #00, Pasadena, California 0 1 ; 0 South Lake Avenue, #01, Pasadena, California 01; and 1 Moorpark Street, #0, Studio City, California 10. In the event any person or entity fails to deliver or transfer any receivership asset or document or otherwise fails to comply with any provision of this Section, the Receiver may file ex parte an Affidavit of Non-Compliance regarding the failure. Upon filing of the affidavit, the Court may authorize, without additional process or demand, Writs of Possession or Sequestration or other equitable writs requested by the Receiver. The writs shall authorize and direct the United States Marshal or any sheriff or deputy sheriff of any county, or any other federal or state law enforcement officer, to seize the asset, document, or other thing and to deliver it to the Receiver. E. TRANSFER OF FUNDS TO THE RECEIVER IT IS FURTHER ORDERED that, upon service of a copy of this Order, all financial institutions, finance companies, commercial lending companies, credit card processing agents or agents providing electronic funds transfer services or automated clearing house processing, brokerage houses, escrow agents, money Page of

33 market or mutual funds, title companies, commodity futures merchants, commodity trading companies, precious metal dealers, trustees, or other fmancial institutions or depositories of any kind, shall cooperate with all reasonable requests of the Receiver relating to implementation of this Order, including transferring funds at his or her direction and producing records related to the assets of the Receivership Defendants. F. STAY OF ACTIONS IT IS FURTHER ORDERED that: 1. Except by leave of this Court, during pendency of the receivership ordered herein, Defendants and all other persons and entities be and hereby are stayed from taking any action to establish or enforce any claim, right, or interest for, against, on behalf of, in, or in the name of, the Receivership Defendants, any of their subsidiaries, affiliates, partnerships, assets, documents, or the Receiver or the Receiver's duly authorized agents acting in their capacities as such, including, but not limited to, the following actions: a. Commencing, prosecuting, continuing, entering, or enforcing any suit or proceeding, except that such actions may be filed to toll any applicable statute of limitations; b. Accelerating the due date of &~y obligation or claimed obligation; filing, perfecting or enforcing any lien; taking or attempting to take Page of

34 possession, custody, or control of any asset; attempting to foreclose, forfeit, alter, or terminate any interest in any asset, whether such acts are part of a judicial proceeding, are acts of self-help, or otherwise, or setoff of any debt owing to the Receivership Defendants that arose before the date of this Order against any claim against the Receivership Defendants; c. Executing, issuing, serving, or causing the execution, issuance or service of, any legal process, including, but not limited to, attachments, garnishments, subpoenas, writs of replevin, writs of execution, or any other form of process whether specified in this Order or not; or d. Doing any act or thing whatsoever to interfere with the Receiver taking custody, control, possession, or management of the assets or documents subject to this receivership, or to harass or interfere with the Receiver in any way, or to interfere in any manner with the exclusive jurisdiction of this Court over the assets or documents of the Receivership Defendants.. This Order does not stay: a. The commencement or continuation of a criminal action or proceeding; b. The commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power; or Page of

35 c. The enforcement of a judgment, other than a money judgment, obtained in an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power.. Except as otherwise provided in this Order, all persons and entities in need of documentation from the Receiver shall in all instances first attempt to secure such information by submitting a fonnal written request to the Receiver, and, if such request has not been responded to within thirty (0) days of receipt by the Receiver, any such person or entity may thereafter seek an Order of this Court with regard to the relief requested. G. COMPENSATION OF RECEIVER IT IS FURTHER ORDERED that the Receiver and all personnel hired by the Receiver as herein authorized, including counsel to the Receiver and accountants, are entitled to reasonable compensation for the performance of duties pursuant to this Order and for the cost of actual out-of-pocket expenses incurred by them, from the assets now held by, or in the possession or control of, or which may be received by the Receivership Defendants. The Receiver shall file with the Court and serve on the parties periodic requests for the payment of such reasonable compensation, with the first such request filed no more than sixty (0) days after the date of this Order. The Receiver shall not increase the hourly rates used as the bases for such fee applications without prior approval of the Court. Page of

36 offi the Receiver will well and truly perform the duties of the d abide by and perform all acts the Court directs. XI. ACCESS TO BUSINESS PREMISES IT IS FURTHER ORDERED that Defendants and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any trust, corporation, subsidiary, division, or other device, and the Receiver, shall allow Plaintiffs representatives, agents, and assistants, as well as the Receivership Defendants' representatives, and the Individual Defendants themselves, reasonable access to all of Receivership Defendants' business premises, or any other premises where the Receivership Defendants conduct business or customer service operations. Such locations include, but are not limited to, Arden Avenue, Glendale, California 0. The purpose of this access shall be to inspect and copy any and all books, records, documents, accounts, and other property owned by, or in the possession Page of

37 of, the Receivership Defendants or their agents. The Receiver shall have the discretion to determine the time, manner, and reasonable conditions of such access. Plaintiff may remove materials from the Receivership Defendants' business premises to inspect, inventory, and copy such materials. Plaintiff shall return materials so removed within five () business days of completing said inventory and copying. Plaintiffs access to Defendants' documents pursuant to this Section shall not provide grounds for any Defendant to object to any subsequent request for documents served by Plaintiff. XII. REPATRIATION OF ASSETS AND DOCUMENTS IT IS FURTHER ORDERED that Defendants shall: 1 A. Within three () business days following service of this Order, take such steps as are necessary to repatriate to the territory of the United States of America all documents and assets that are located outside such territory and are held by or for Defendants or are under Defendants' direct or indirect control, jointly, severally, or individually; B. Within three () business days following service of this Order, provide Plaintiff with a full accounting of all documents and assets that are located outside of the territorj of the United States of America or that have been transferred to the territory of the United States of America pursuant to Subsection Page of

38 A above and are held by or for any Defendant or are under any Defendant's direct or indirect control, jointly, severally, or individually, including the addresses and names of any foreign or domestic financial institution or other entity holding the documents and assets, along with the account numbers and balances; C. Hold and retain all such documents and assets and prevent any transfer, disposition, or dissipation whatsoever of any such documents or assets; and D. Within three () business days following service of this Order, provide Plaintiff access to Defendants' records and documents held by financial institutions or other entities outside the territory of the United States of America, by signing and delivering to Plaintiffs counsel the Consent to Release of Financial Records attached to this Order as Attachment A. XIII. INTERFERENCE WITH REPATRIATION IT IS FURTHER ORDERED that Defendants are hereby temporarily restrained and enjoined from taking any action, directly or indirectly, which may result in the encumbrance or dissipation of foreign assets, or in the hindrance ofthe repatriation required by the preceding Section XII of this Order, including, but not,.. d t 1m1te ~o: Page of

39 A. Sending any statement, letter, facsimile, or wire transmission, or telephoning or engaging in any other act, directly or indirectly, that results in a determination by a foreign trustee or other entity that a "duress" event has occurred under the terms of a foreign trust agreement, until such time that assets have been fully repatriated pursuant to the preceding Section of this Order; and B. Notifying any trustee, protector or other agent of any foreign trust or other related entities of either the existence of this Order, or of the fact that repatriation is required pursuant to a Court Order, until such time as assets have been fully repatriated pursuant to the preceding Section of this Order. XIV. EXPEDITED DISCOVERY IT IS FURTHER ORDERED that pursuant to Federal Rules of Civil Procedure 0(a), 1(a),, and, and notwithstanding the provisions of Federal Rules of Civil Procedure (d) and (f), 0(a)()(A), and 1(a)()(A), the parties are granted leave, at any time after entry of this Order to: A. Take the deposition of any person, whether or not a party, for the purpose of discovering the nature, location, status, and extent of the assets of Defendants, and Defendants' affiliates and subsidiaries; the nature and location of documents reflecting the business transactions of Defendants, and Defendants' affiliates and subsidiaries; the location of any premises where Defendants, directly Page of

40 or through any third party, conduct business operations; the Defendants' whereabouts; and/or the applicability of any evidentiary privileges to this action; and B. Demand the production of documents from any person, whether or not a party, relating to the nature, status, and extent of the assets of Defendants, and Defendants' affiliates and subsidiaries; the nature and location of documents reflecting the business transactions of Defendants, and Defendants' affiliates and subsidiaries; the location of any premises where Defendants, directly or through any third party, conduct business operations; the Defendants' whereabouts; and/or the applicability of any evidentiary privileges to this action. ~a~civ 'flin~e (}-days notice shall be deemed sufficient for any such deposition, /!;jf:j. ays notice shall be deemed sufficient for the production of any such documents, and twenty foyr () hours notice shall be deemed sufficient for the production of any such documents that are maintained or stored only as electronic data. The provisions of this Section shall apply both to parties to this case and to non-parties. ~~ limitatimj.~ aaa eonditions set forth in Federal Rules ofoivil Procedure 0(a)()(A)(ii) and 1 (a)()(a)(ii) regarding subseqa~nt depositieflsrof an-individual shall not apply to depositions taken pursuant to this Section. Aey- ~~~~~~~~~~~~~~~~~~~~~~~n«re~d~t~g'wn~ar,~d~a~u~y~b- -H-1mnit-rnr1:he'll"[[mtreruf-detmsifum&...QE~b-tl:lle-J~~l Rule~ of Civil Procedure, Page 0 of